FiNANCiE, a new social network supporting personal dreams, released its open beta on March 7, 2019. It is the latest in a string of services such as crowdfunding and closed online communities that allow individuals to gather support and raise funds. But what makes FiNANCiE unique is that it uses blockchain technology to provide mechanisms not only for fundraising but also community mobilization, for example through service transparency and participant incentives. We asked founder Hironao Kunimitsu, who describes FiNANCiE as “next-generation social media to replace the approval-craving social media of today”, about the project’s development, technical aspects, and goals.
What is FiNANCiE?
People with dreams or goals, called heroes, issue “hero cards”, and users who support them (fans) purchase these to help fund their activities. Fans with hero cards can apply for rewards offered by the hero, and early fans may receive large incentives if a hero becomes popular.
Managing hero card ownership as blockchain (Ethereum) tokens guarantees transparency and prevents unauthorized alteration. There are also mechanisms to maintain the liquidity of the hero cards, such as employing the Dutch auction method to determine the initial selling price and providing a marketplace using the Bancor algorithm. Japanese fans can buy and sell the hero cards with Japanese yen, however, allowing them to participate without any knowledge of cryptocurrency.
The end of approval-craving social media and the dawn of self-realizing social media
―― What led to the birth of FiNANCiE?
Kunimitsu: The biggest thing was that I wanted to create a social network for a new era. Much of current social media, as represented by Facebook, is used by people to satisfy their craving for approval. But I don’t think approval craving-based social media will last that much longer.
Many people continue to post artificially glamorous lives in the form of embellished photos and exaggerated comments. But eventually, I think they’ll start to feel the emptiness of that.
So what is the next generation that will replace such current social media? I think it’ll be based on self-realization, and brainstorming how we could create a social network in which participants help each other toward self-realization was the beginning of FiNANCiE.
―― Did you come up with this mechanism from your own investment experience?
Kunimitsu: My experiences in my teens and twenties were significant. When I graduated from high school, I couldn’t find anything I wanted to do and wasn’t making any choices about my future, so I spent four years in China and backpacked through Asia, North America and Latin America for two years. Finally, I spent four years in Los Angeles before coming back to Japan at the age of 29.
In my case, I was blessed with good chance encounters and had the opportunity to start a business. However, many people, especially young people, don’t know how to seize opportunities such as how to have encounters and how to make their dreams come true. I believe, therefore, that if we can create a way for such people to be able to seize opportunities, this will produce new, unprecedented innovations.
Games and communication drive new technology
―― You’ve often said, “I want to do things that can only be done with blockchain. Games and social networks are the killer use cases.” Why is that?
Kunimitsu: Because if you look back on the history of IT and the Internet, you see that they’ve driven development.
Fresh technology is often not immediately put to use. Even with new technology, what people want falls into categories that are first and foremost based on human desires. If there are a number of issues around the use of a new technology, furthermore, users must have a high level of literacy and tolerance. What checks all of these boxes is games and communication – and porn, of course. These three have always led the market as the first use cases.
The first thing everyone went crazy about when personal computers appeared on the scene, including Steve Jobs, Bill Gates, and Mark Zuckerberg, was games. I was the same.
Next, when the Internet came along, everyone started with games. Following that, communication services like chat and BBS were born. The same is true when mobile phones came out and when smartphones appeared. Now VR is booming for the same reason. The beginning is always games, communication, and porn. When I founded gumi, the first thing I worked on was social media, and after that we were able to grow significantly with games. So I have extremely strong feelings about social networks.
What was perhaps unfortunate for blockchain was that despite being technically immature, its very first use case was investment, a financial domain requiring high reliability and security. That’s why it’s become such a big issue and attracted this much attention.
Honestly, current blockchains are not yet a finished technology. We need to solve a variety of problems to bring it to a level where it can be put to use. So over the next few years, increasing blockchain use cases in the fields of gaming and communication should mature the technology to the point where it’s used for mission-critical applications. I look forward to that era.
Differentiating on-chain and off-chain to prioritize usability
―― In terms of technical challenges, you’ve said that you focused on differentiating and combining on-chain and off-chain, but what does that mean exactly?
Kunimitsu: Initially in development we were trying to implement everything on-chain. However, as I mentioned, blockchain is still midway as a technology. From the standpoint of usability, we concluded that the most practical and suitable solution was to implement on-chain where absolutely necessary and off-chain for the rest.
The absolutely necessary parts are the management of ERC-20 tokens for the hero card ownership, the Bancor algorithm, and the reverse auction for the initial sale. These must use blockchain technology. But the rest is processed off-chain, and the term “off-chain” here means not a second layer or a sidechain but regular web services.
Ethereum has a sidechain called Plasma that solves the scalability problem, but even that has yet to reach maturity. When dealing with users’ money, safety is a must, so we’re handling this with existing e-commerce payment options so that in the event that something happens, we can protect and recover users’ assets.
What we struggled with was connecting the on-chain and off-chain elements seamlessly to be able to make payments. I think it’s one of the most usability-focused blockchain services out there since blockchain technology became available. For example, using MetaMask to manage and handle tokens is too difficult for most users.
However, if the technology continues to mature, the scope of what can be done on the blockchain will expand and on-chain processing will increase.
―― Instead of ERC-20, I believe you had the option of using ERC-721 for issuing the hero cards, making them unique cards. Did you ultimately choose ERC-20 to prioritize liquidity in the marketplace?
Yes, exactly. We thought that ERC-20 tokens would be suitable for FiNANCiE because of their “countability” (they can each be treated as having the same value). ERC-721 tokens can’t be divided, and each possess their own value, so monetary sums can only be calculated by negotiated transaction.
―― Does using ERC-20 tokens create the possibility of users trading directly with each other without going through the marketplace?
Kunimitsu: It’s technically possible, but since this would have legal issues in Japan, we’re currently limiting it to within FiNANCiE. However, for the global version, if the country’s legal framework allows it, we’d like to enable users to trade directly with each other.
As it is based on ERC-20, the technology is tokens based on the Ethereum blockchain. That said, FiNANCiE does not only target people familiar with cryptocurrency. Rather, we really want it to be used by people who don’t have a good understanding of cryptocurrency. We chose not to do cryptocurrency transactions because we wanted to prioritize the user experience above all else and lower the barrier to entry by settling payments in Japanese yen.
FiNANCiE’s fundamental purpose is to support heroes. We use the blockchain to guarantee transparency and the Bancor algorithm for liquidity. Employing the Dutch auction method is also to make the hero card pricing process transparent. All the fine-tuning of mechanisms and selection of technologies that we’ve done has been for our chief aim of creating a self-realizing community.
Supporting dreams with a target of one million fans by the end of the year
―― There are other community services that take the form of heroes and supporting fans. Among them, there have been cases where fans crowded in and got enthusiastic if the “heroes” were celebrities or good storytellers, but eventually lost interest and faded away. Is there a way to prevent this?
Kunimitsu: The initial heroes do not include celebrities or other people considered to be successful. We selected them looking for people who had experience and ability in a specific field but who were not yet well-known. Centrally, the things they’re working on are not in pursuit of profit. The number of heroes will start at around 10 in the open beta stage with a goal of 40 to 50 by the time it’s officially released in May 2019.
―― The heroes will always be selected by FiNANCiE, is that correct?
Kunimitsu: In the early stages, yes. To avoid problems, we want to thoroughly vet them, support community management, and build up a pattern of success. But in the future, I’d like to make it a service where anyone who wants to can become a hero.
―― FiNANCiE also has “human capitalists” – what is this role?
Kunimitsu: They play a similar role to venture capitalists for entrepreneurs. Not only do they offer financial support, they also come alongside young heroes who have things they want to do but don’t know how to accomplish them, giving careful advice on how to succeed and growing together with their fates joined as in a three-legged race. They’re like the patrons of artists in the old days.
―― What are your specific goals right now?
Kunimitsu: Our current goal is to increase the number of heroes with dreams and aspirations that people want to support, and reach one million users by the end of 2019. However, rather than just trying to increase the number, we want to first achieve good examples of dreams being supported on the FiNANCiE platform and steadily produce heroes with firm support from fans.
The most important thing is to make it a platform where both heroes and fans are happy. Dreams are achieved when fans with skills and funds cooperate to boost the hero – that’s the ideal.
Writer: Kanako Ishikawa
Editor: Makoto Nakazato
Photographer: Ayano Tomozawa
Founder, Financie, Inc.
Representative Director and Chairman, gumi, Inc.
After graduating from California’s Santa Monica College in 2004, Kunimitsu joined Atmovie Inc. and became a director the same year. While producing movies and dramas, he launched various new Internet-related businesses. In 2007, he founded gumi, Inc. and became its representative director. In 2015, he established Tokyo XR Startups Co., Ltd., a wholly owned subsidiary that supports VR and AR startups, and became its representative director as well. Then in 2016, he joined VR FUND, L.P. as a general partner, a company aiming to invest in VR/AR companies mainly in North America, and established Seoul XR Startups Co., Ltd. in South Korea, becoming a director there also. In 2017, he established Nordic XR Startups Co., Ltd. to support Northern European VR/AR startups and became its representative director. The following year, he entered the blockchain business with gumi Cryptos, an anonymous partnership. Finally, in March 2019, he founded Financie, Inc., which operates a “dream sharing” service called FiNANCiE that uses blockchain technology.